How New Chapter 13 Bankruptcy Laws Changed

The initial inquiry for all Chapter 13 bankruptcy plans centers upon income received. Because of several new tests, and primarily the new disposable income test, qualification is somewhat more difficult. Debtors must have regular income to qualify, yet not too much disposable income to propose a three year plan. Virtually anyone with regular income may file a five year plan, so long as all disposable income is contributed to plan over the entire term.

The Chapter 13 bankruptcy disposable income test is based upon a new federally mandated schedule of allowable expenses. Under the old law, judges determined reasonableness of monthly living expenses according to historical data, needs, and individual circumstances. Under the new law, judges must calculate disposable income based on a single standard for the approved monthly living budget for all people, in all states, regardless of special needs, disabilities, incapacities, or transportation costs for commuting. The new test sets the uppermost legal limit for monthly expenditures.

Additional Chapter 13 Bankruptcy Requirements

Before any person may file Chapter 13 Bankruptcy, attendance in an approved course providing credit counseling, budget investigation, and financial analysis must be concluded within the 180 days prior to initiating the case. The cost of these courses is regulated by law, yet little guidance appears within the statute for determining reasonable tuition costs for individuals who are bankrupt. Nevertheless, many courses are available online, even Chapter 13 Bankruptcy Preparation Courses. Also, a few courses are provided by non-profit organizations that are subsidized by major credit card companies.